Most commentators are dissecting the reasons why the stock market declined last Friday, but also fell by over 3% (-$130 an ounce) on Friday, wiping out nearly all its early 2026 gains. The has now surpassed gold for 2026 so far – but don’t forget last year’s 65% gold-gain, and big gains since 2000 or 2020. As the table (below) demonstrates, gold has topped stocks in most long-term comparisons since the day 55 years ago when President Nixon ended the last vestiges of the US dollar’s gold backing in mid-1971:
Gold vs. the S&P 500 Since 1970, 2000, 2020, and 2026
As our 250th national birthday approaches, maybe we can celebrate gold’s role in our national prosperity. To summarize that tale, here are events happening in the summers of 1776, 1791, 1861, 1896 and 1971:
- 250 years ago, on June 22, 1776, Congress issued $2 million in new paper money, called Continentals. The new currency featured a likeness of Revolutionary soldiers and an inscription, “The United Colonies.” Unbacked by gold, the Continental quickly became nearly worthless, as we suffered 30+% inflation in 1779, our highest single year of inflation, ever. In a 1779 letter to John Jay, America’s future first Chief Justice, General George Washington issued a plea for sound money, saying: “A wagon load of money will scarcely purchase a wagon load of currency.”
- 235 years ago (June 1791), while the U.S. was planning gold-backed dollar coinage, the new French revolutionary government launched the first inflationary printing of their “assignat,” the equivalent of America’s Continental – unbacked and inflationary. The assignat became worthless within five years, leading to Napoleon’s rise. The French had to learn about inflation first-hand.
Before moving on, let’s take a look at the profound words our Founders used to justify gold coinage:
Our Founders Created a Strong Gold-Backed Dollar from the Start
At the time of our nation’s birth, our major Founding Fathers spoke glowingly of gold and silver, since they had already struggled with inflation caused by paper “Continentals,” which flooded the nation then.
The man most responsible for writing the Declaration of Independence, Thomas Jefferson, feared the dangers of paper money, writing, “Paper is poverty…it is only the ghost of money, and not money itself.”
Later on, as President in 1802, Jefferson wrote to Albert Gallatin, his Treasury Secretary, saying,
“Specie is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.”
In retirement, during the War of 1812 and the inflation which threatened then, Jefferson became even more outspoken in his call for gold backing. Writing to John W. Eppes in 1813, Jefferson said:
“If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air…. Capital may be produced by industry and accumulated by economy, but jugglers only will propose to create it by legerdemain tricks with paper.” – Thomas Jefferson in 1813.
After the war’s end, Jefferson didn’t give up the fight, as he wrote to John Taylor in 1816:
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [them] will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.’” – Jefferson in 1816.
Thomas Paine, famous for writing “Common Sense” in early 1776, also spoke eloquently about gold in a pamphlet titled “Dissertations on Government, the Affairs of the Bank, and Paper Money” (1786):
“Gold and silver are the emissions of nature: paper is the emission of art. The value of gold and silver is ascertained by the quantity which nature has made in the earth. We cannot make that quantity more or less than it is, and therefore, the value being dependent upon the quantity, depends not on man. Man has no share in making gold or silver; all that his labors and ingenuity can accomplish is to collect it from the mine, refine it for use and give it an impression, or stamp it into coin…. Nature has provided the proper materials for money: gold and silver, and any attempt of ours to rival her is ridiculous.” – Thomas Paine, writing in 1786.
All these forces came together in our Constitution, drafted mostly by James Madison, writing:
“Congress shall have Power… To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” (Article 1, Section 8), and “No State shall… coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.” (Article I, Section 10).
This is why America had no inflation to speak of in the first 150 years of our nation’s existence. Only once during that time did we feel forced to inflate our currency without gold backing – in the 1860s.
The One Early (But Necessary) Departure from Gold – Lincoln’s Greenbacks
- 165 years ago, on July 17, 1861, just before the first major Civil War battle at Manassas (Bull Run), President Abraham Lincoln proposed our first non-gold paper-based currency. Greenbacks (“Demand Notes”) were authorized by an Act of Congress on July 17 and were soon called Greenbacks for the dark green ink on the back of the bill, but they were not issued until 1862.
After the war, as Chief Justice of the Supreme Court, former Treasury Secretary Salmon P. Chase cast the deciding vote, declaring the creation of Lincoln’s Greenbacks unconstitutional, undoing his own actions.
Chase later gained fame as the very face of inflation, with his portrait on $10,000 bills, printed 1928-46.
Let’s close with two more anniversaries marking the checkered marriage of gold and the U.S. dollar:
- 130 years ago, on June 16-18, 1896, Republican gold bugs nominated William McKinley for President on a platform that supported the gold standard. Three weeks later, on July 7, 1896, at the Democratic Party convention in Chicago, a young writer from Nebraska, William Jennings Bryan, spoke before 20,000 delegates, railing eloquently against the Republicans’ gold standard, concluding, “You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.” The delegates went crazy as Bryan swept the nomination.
- 55 years ago, on August 15, 1971, President Nixon closed the gold window for domestic or foreign claims. Since then, the dollar has fallen 88% in buying power and over 99% to gold.
Gold is not dead. It’s taking a well-deserved nap while the U.S. keeps adding $2 trillion a year in red ink.